Results of a 'Risky' Tax Cut

Democrats must be ripping their hair out.

They had planned on running against President Bush by focusing on a bad economy. But last week’s news that the GDP had shot up by 7.2 percent quickly deflated the effectiveness of that tactic.

What must really annoy them is that the tax cuts – tax cuts they ridiculed, derided, attempted to kill, and now threaten to repeal – are being credited as a source for the economic turnaround.

“Gross Domestic Product Grew 7.2 Percent in Third Quarter”

    A collective cheer from economists and politicians went up Thursday with the news that the economy grew at a breakneck pace this summer.

    The 7.2 percent growth in gross domestic product, the measure of all goods and services produced domestically, was more than a full percentage point better than expected. It was led by a surge in consumer spending – fueled by this year’s tax cuts – followed by higher business expenditures and exports.

    -Dallas Morning News

“U.S. Economy Expands 7.2% in 3rd Quarter; Tax Cuts, More Spending Credited”

    The nation’s economy, which has struggled since emerging from a recession two years ago, shifted into overdrive in the third quarter and grew at its fastest pace in nearly two decades, propelled by tax cuts, strong consumer and corporate spending and exports. [???]

    “We have got these … major forces all going in the same direction,” said Michael Englund, chief economist at MMS International, a financial consulting firm in New York. “The huge tax cut is perfectly timed with increased business spending. Many people’s refund checks are going to be much larger than people realize.”

    -Baltimore Sun

“Now We Know Truth”

    The media have been loath to see it. And, even after it stared them in the face Thursday, Democrats still wanted to deny it.

    It’s the recovery.

    It’s here.

    And it is now undeniable. [???]

    The political left — which believes government can tax and spend the country’s way to prosperity — did its best to convince us that President Bush somehow caused the economic slowdown that is now history. In truth, cutting taxes not only helps ease economic downturns, they pull the country out of the doldrums sooner.

    -Augusta Chronicle

“Economy Roars Into High Gear; 3rd-Quarter GDP Up 7.2%; Biggest Gain Since 1984”

    Powerful surges in consumer and business spending during the summer drove the U.S. economy to its biggest quarterly gain in almost two decades, raising hopes that the persistent, post-bubble slump finally may be nearing an end.

    Economists and business executives, especially those in the battered manufacturing sector, remained cautious about future growth and hiring. But the third-quarter activity blew past even the most optimistic forecasts and provided evidence that a buffet of tax breaks and low interest rates may be giving the economy the jolt it needs to build a sustained recovery. [???]

    Consumers flush with tax relief and the proceeds of mortgage refinancings continued their buying spree during the quarter, snapping up both big-ticket items such as cars, homes and appliances and non-durable goods such as apparel. Personal consumption overall jumped 6.6 percent, riding a 26.9 percent rise in durable goods purchases.

    -Chicago Tribune

“U.S. Economy Shows Biggest Rise in Years; Officials Hope Improvement Spurs New Jobs”

    The U.S. economy grew at a stunning 7.2 percent in the third quarter, the Commerce Department reported. That’s a pace not seen in 19 years and more than double 3.3 percent growth rate in the second quarter.

    The rip-roaring economy was spurred headlong by strong consumer spending, fueled by the Bush tax cuts and the high level of mortgage refinancing.

    -Houston Chronicle

“Economy Picks Up Steam; Third-Quarter Growth Is Strongest Since 1984”

    Responding to tax cuts, low interest rates and deficit spending, the national economy sprinted forward in the third quarter at an annual growth rate of 7.2 percent.

    -Kansas City Star

“Economy’s Surge Highest Since ’84”

    President Bush won credit yesterday for pushing the economy to a roaring comeback with a stunning 7.2 percent growth rate in the last quarter – the strongest in 20 years. [???]

    Many economists lauded Bush’s broad tax cut package of $1.7 trillion as having helped lift the sputtering economy from its bleak rut of the past year – the result of corporate scandals and global unrest.

    “It shows you that his policies are giving us a realistic payoff,” said Hugh Johnson, managing director of First Albany Corp.

    -New York Post

“GDP Soars, Posting Best Quarter Since ’84”

    A surprisingly strong U.S. economy grew at its fastest pace in nearly two decades this summer, boosting hopes that a healthy, jobs-creating recovery may be getting under way.

    The gross domestic product – the sum of all the goods and services produced in the United States – rose at a 7.2 percent annual rate in the July-to-September quarter, the Commerce Department reported yesterday.

    That was up from 3.3 percent in the previous quarter, and was the best performance since the economy recorded a 9 percent growth rate in the first quarter of 1984.

    Consumers were the force behind the growth, thanks to an income-tax cut and a flurry of mortgage refinancings that put more cash in their pockets.

    -Philadelphia Inquirer

“Economy Jumps, But Jobs Lag; Spending Expands; Experts Say Wallets May Follow”

    The gross domestic product, a sweeping measure looking at the entire output of the U.S. economy, jumped a sizzling 7.2 percent in the third quarter, the U.S. Department of Commerce reported Thursday. It was the biggest jump since 1984 and dwarfed the 100-year average of 3 percent.

    The GDP’s growth spurt stemmed from consumer and business spending and a shot in the arm from federal tax cuts. Most economists believe the strong GDP should remedy the lack of significant job growth.

    -Arizona Republic

“GDP Aside, Jobless Rate Is Number That Matters”

    For now, President Bush’s tax cuts, plus spending on the war in Iraq and extremely low interest rates, did what they were expected to do–give the economy a huge dose of stimulus and even cause businesses to start investing again. That means the economic story could be breaking in Bush’s favor. . . .

    -Chicago Tribune

“Economic Growth Spurt; GDP Gains 7.2%, But Jobs Still a Concern”

    With a burst of strength that even Arnold Schwarzenegger would admire, the nation’s consumers bought school clothes, food and new cars at a record pace this summer and powered the national economy to its fastest quarter of growth in nearly two decades.

    The economy grew at an unexpected 7.2 percent rate from July through September, more than twice the rate for the previous three months and the fastest overall rate since the spring of 1984. [???]

    Consumers benefited from lower tax withholding and low interest rates, U.S. exports rose, and the statistics recorded the first sign of business spending. All together, they drove the measure of the nation’s $11 trillion economy far ahead of 3.3 percent growth of last quarter and the 2.4 percent growth in 2002.

    -New York Newsday

“U.S. Economy Soars as Growth Rate Hits 7.2%; For Northwest, That Means Things Likely Won’t Get Any Worse”

    With consumers flush with money from a tax cut and record mortgage refinancings, the U.S. economy was hitting on all cylinders for the first time in several years in the third quarter, posting its fastest growth rate since 1984, when Ronald Reagan was in the White House.

    -Seattle Times

“U.S. Economic Growth Surges; Output Rises at Highest Rate Since 1984, but Jobs Still Decline”

    Fueled by personal-income-tax cuts that became effective in July and a record surge in home-mortgage refinancing that gave homeowners more cash to spend, consumer purchases rose at a very strong 6.6 percent annual rate in the third quarter, by far the strongest factor in the overall gain in the nation’s economic output, or gross domestic product. Businesses also got new tax incentives to invest.

    -Washington Post